NEW DELHI — In a sharp rebuttal to the opposition, Union Finance Minister Nirmala Sitharaman clarified on Thursday that the proposed Merchant Discount Rate (MDR) on digital transactions will apply exclusively to merchants, ensuring that end-consumers continue to use the Unified Payments Interface (UPI) free of charge.

Addressing concerns raised on social media platform X by Congress leader Jairam Ramesh, the Finance Minister stated that revenue generated from MDR would directly support banks and fintech companies in upgrading their payment infrastructure, boosting innovation, and strengthening cybersecurity protocols.

"Before spreading a canard, @Jairam_Ramesh ji, please consider this: Merchant Discount Rate (MDR) applies only on the merchants and not on the end users/customers," Sitharaman posted in response to Ramesh's claim that the public would be forced to pay extra for UPI transactions. "It will support the Banks & Fintech to invest more on infrastructure, innovation & security. All users of UPI will reap the benefits of this investment."

Parliamentary Approval and Committee Oversight

Sitharaman highlighted that no decisions on introducing or structuring MDR charges have been finalized yet. Any recommendation regarding MDR will be handled by the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), only after Parliament debates and passes the Taxation and Other Laws (Amendment) Bill, 2026.

The proposed legislation seeks to amend Section 10(A) of the Payment and Settlement Systems Act, 2007. The amendment will establish the legal framework empowering the central government to notify specific electronic payment modes or transactions that will remain fee-free, while enabling a framework for charges where appropriate.

While the Bill itself does not introduce a specific charge or fix an MDR rate, it provides the statutory flexibility to modify the existing zero-MDR framework on UPI and RuPay card transactions.

Opposition Protests and Parliamentary Debate

Hitting back at the Congress party over ongoing disruptions in Parliament, Sitharaman noted that these nuances could have been thoroughly debated on the floor of the House if the opposition had engaged constructively. Parliamentary proceedings in both the Lok Sabha and Rajya Sabha have faced repeated disruptions since the start of the Monsoon Session on July 20.

The debate over UPI sustainability comes at a time when digital payment volumes in India continue to reach record highs. While consumers will remain shielded from transaction costs, industry experts note that a balanced merchant fee framework could provide financial sustainability to processing banks and payment system operators, enabling long-term investments in fraud prevention and system uptime.